Operation of a successful business today requires the ability to collaborate with companies throughout the world. Further, oftentimes today's businesses are of such a complex nature that numerous suppliers of goods and services are utilized by a single business. To further complicate matters, many providers of goods and services are so complex that they also require collaborative efforts with other businesses in order to meet their own customers' needs. All together, this creates a hierarchy of multiple levels of interactivity that are required just to meet daily logistical needs and keep a business running smoothly.
Risk is an important factor to be considered whenever any kind of interaction is implemented between a contracting business and a supplier. Risk factors that are of particular concern when contracting with suppliers of goods and services include any factors that could expose a business to loss or theft, as suppliers often have direct access to proprietary business systems and information. Businesses therefore tend to expend valuable resources managing and mitigating risk factors inherent to supplier relationships. However, such resources tend to be allocated subjectively and don't tend to take into account all of the factors that may play into a multi-faceted contractor-supplier relationship. Instead, traditional approaches to management of risk posed by suppliers focus on the amount of money spent with a particular supplier, and perhaps also on regulatory requirements that must be met when working with a supplier.
Suppliers may present risks to the business contracting with them in a number of different ways, and it is difficult to compare one supplier to another when many different variables must be taken into consideration. Thus, it can be challenging to know how much overall risk a supplier presents to a business, and how the risk presented by one supplier compares to that presented by a second supplier.